Public Procurement Reforms in Japan : Local Challenges for Social Outcomes

The reform of public procurement has been controversial not only in the political dimension but also in the discourse of pubic management in the post-New Public Management era. In Japan, after a shocking bribery scandal in which the politicians and major construction companies were involved in the 1990s, the central and local government introduced an ʻopen and competitive tendering systemʼ to make tendering open, fair, and more competitive. It was followed by the promotion of the ʻE-tendering systemʼ to purchases goods and services through electronic application. Reformers expected that these measures would promote the transparency and efficiency of public procurement, and consequently, contribute to the restoration of public trust in the government. However, the competitive tendering does not always improve the quality of public services. Bidders might employ unskilled, low-wage workers or temporary workers for the lowest price in the bidding. This is called ʻsocial dumping.ʼ In addition, the competitive tendering tends to discourages small firms in the public procurement, and consequently, damages local economy. To ensure the ʻbest valueʼ of public procurement, the government of Japan introduced a ʻcomprehensive appraisal systemʼ that combines price and technical skills of the tenderer. Using the same system, local governments take into account ʻsocial outcomesʼ in the public works contract in various ways. In addition, local governments face challenges in establishing the ʻpublic contract regulationʼ to ensure the minimum wage (living wage) standards for the workers working under the public procurement contract. However, these local challenges remain small steps. Keyword: Public procurement, Public Contract Regulation, Social outcomes, Japan